Market tailspin: 5 reasons why investors got spooked

Trade on Friday was so volatile that the BSE benchmark Sensex tanked, only to recover by over 800 points before the end of the day. Here are a few factors that have contributed to uncertainty in the market

After a choppy day of trade, stock market ended on a negative note. Nifty could not hold 11,200 at close, Sensex closed over 200 points lower. Here are a few factors responsible for the sell-off in the market.

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DHFL crashed over 50 percent on concerns of liquidity crisis. However, management clarified that the fundamentals of the company are intact.

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The yields on DHFL's securities rose after DSP Mutual Fund sold Rs 200-300 crore of DHFL paper this week

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Sanjiv Bhasin of IIFL told Moneycontrol that a selloff in non-banking financial companies (NBFCs) is a lot to do with the fiasco around IL&FS. “This is the real elephant in the room. The real weakness is due to this issue and not a depreciating rupee. All mutual funds and other entities have some exposure to such instruments and that is impacting stocks in the space,” Bhasin said.

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Investors' panic eventually spread to the entire housing finance sector and other stocks like Indiabulls Housing Finance too fell by over 20 percent during the session

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Another factor that contributed to the fall was the sharp move in Yes Bank after RBI denied extension of tenor for CEO and MD Rana Kapoor.

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In addition to the above-mentioned factors, the Nifty fell by more than its 100-day exponential moving average and breached the crucial 11,000 intraday.